Paying Tenant Commission for Good Behavior!

As a sales guy, I am obviously motivated by the all-mighty dollar :-) Each sales dollar I earn goes into a savings account from which I purchase investment property.. This is how I am motivated today, and someday this could change. On a macro-perspective, It may not be money, but I truly believe most people are motivated by something-- some type of measurement system.

I'm curious if anyone on this blog has ever implemented a customer loyalty/management system to encourage good behavior? if so, what have you implemented (or what would you like to implement)? What are the positive behaviors that are important to your business?

It is an interesting potential discussion, I look forward to seeing how it develops.

As I am sure you know, there tends to be an emphasis on negative reinforcement/consequences rather than positive reinforcement, on BP and among landlords in general. This is spite of the pretty overwhelming body of evidence that positive reinforcement is more effective.

My general approach is not toward either positive nor negative reinforcement, for the most part. I believe pretty strongly that I am not "the boss" but that I am not selling hamburgers, and therefore it is not true that "the customer is always right."

How I look at it is as a mutually beneficial business transaction between equals.

I treat people with respect, tell them what things are really important to me, and listen when they tell me what is important to them. For example, I tell them that if rent is late that is bad and there will be a late fee, but that it is much worse if they don't tell me they have an issue, and I am just left hanging waiting for the check. And if they tell me that they work second shift and need to sleep in the morning? I'm sure not scheduling furnace maintenance at 8:00 AM, any more than I would want it scheduled for me at 2:00 AM. In my opinion, there is too much focus on "my way or the highway" chest-thumping in landlording circles.

I haven't been doing this long, and have completely rehabbed each house before renting it, so I haven't offered enhancements to the property, per se. I did have the hardwood floors in one house professionally cleaned and buffed during a tenant's time there, and I would probably be willing to do things while long term tenants were in place that I would have to do anyway if they left. For example, I am expecting to re-paint every 3-5 years. If I have a tenant who has been their 5 years and is staying, I am not going to refuse to repaint just because it is not turning over.

I have tried quite a few things like this. The biggest reason I got rid of them is they can be as much of a pain to manage the reward systems you have put in place as it is to manage the tenants.

The best thing you are doing is thinking innovation about property management which most landlords fail to do. Look into Jeffery Taylor (Mr.Landloard) and some of his books, he has a lot of great creative ways to deal with tenants and create positive incentives.

I feel its best to create clear rules and penalties if they do not follow the rules and then enforce the rules rather then give then money off.

@Tom Henderson I offer a discount for tenants that set up direct deposit. I usually rent to active duty military so if they set up direct deposit I am (almost) guaranteed that the rent will hit my account in the first few days of the month.

Customer loyalty process I use (also helps facilitate an increase in rent):

Rent was $1000, due on the 1st. New rent $1050 due on the 1st, but if payment received by the 25th of the month the payment required is $1025. This incentivizes the tenant to get the payment to me, not only on time, but EARLY! If done correctly can also show that you are trying to work with them and you appreciate them as a tenant.

I've heard of people doing quarterly inspections and then providing tenants with like a $30 gift. I'm not totally certain on how well such a system works, but the idea is that it incentivizes tenants to let the landlord inspect on a schedule, provides an incentives for the tenant cleaning up on a schedule for your arrival, etc. $30 may be steep (or maybe not every 4 months) but it probably saves headaches.

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